PALMOILMAGAZINE, JAKARTA – Escalating geopolitical tensions involving the United States, Israel, and Iran are beginning to affect the global palm oil industry. The Indonesian Palm Oil Association (GAPKI) reports that shipping and insurance costs for palm oil exports have surged by around 50%, leading to a slowdown in new export contract demand.
GAPKI Chairman Eddy Martono said Indonesia’s palm oil exports are still continuing despite mounting pressure from rising logistics costs driven by global geopolitical instability.
“With the current global situation and ongoing conflicts, we are grateful that palm oil exports are still running. However, logistics and insurance costs have increased significantly—by roughly 50%. At the same time, we must acknowledge that this cost surge has slightly reduced new demand,” Eddy said at the Indonesian Ministry of Agriculture office on Wednesday (March 11, 2026).
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New Export Contracts Begin to Slow
Eddy explained that most of the crude palm oil (CPO) exports currently being shipped are based on previously signed contracts. Meanwhile, the signing of new export contracts has begun to slow as exporters face higher transportation costs.
The logistics surge is particularly affecting shipping routes passing through the Strait of Hormuz, one of the world’s most strategic maritime corridors, which has been directly impacted by escalating tensions in the Middle East.
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“Shipments passing through the Strait of Hormuz are clearly affected. Some routes have temporarily stopped, including shipments to the United Arab Emirates and Iran. However, the export volume to these markets is relatively small,” he explained.
Demand from India and China Remains Stable
Despite disruptions in several trade routes, shipments to some of Indonesia’s major palm oil markets continue to run relatively normally. Demand from key consumers such as India and China remains stable, along with exports to Saudi Arabia.
According to Eddy, GAPKI has not observed any significant buildup of domestic palm oil inventories so far, as export shipments continue to leave Indonesian ports daily, including from Tanjung Priok.
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However, he acknowledged that there has not yet been any noticeable increase in additional demand from major buyers such as India and China. These countries also have access to alternative vegetable oils, including sunflower oil and soybean oil, which can partially substitute palm oil.
In terms of prices, Eddy noted that global CPO prices have not yet shown a significant surge despite the geopolitical uncertainty. Currently, CPO prices remain around US$1,100 per ton.
Looking ahead, GAPKI hopes tensions between the United States, Israel, and Iran will ease soon so that logistics costs can return to normal and export demand for palm oil can recover.
“We will see how the situation develops. Hopefully, when the conflict ends, export demand for CPO will return to normal,” Eddy concluded. (P2)
